Treasury Yield Curve Flashes Warning

By

Min Zeng

Updated Aug. 10, 2011 11:44 p.m. ET

The Treasurys market is flagging fears that recession could be around the corner.

The yield spread between the two-year and 10-year notes, a closely watched gauge of market sentiment known as the benchmark Treasury yield curve, has shrunk sharply this month. On Wednesday the differential tightened to 1.91 percentage points, the lowest level in more than two years, down from 2.59 percentage points late July.